Background
After Catheryn Erickson died, her Kingman property was sold at a trustee’s sale. The trustee deposited $60,849.11 in excess proceeds with the Mohave County Treasurer. Foreclosure Excess Proceeds LLC (FEP) obtained a 2023 court order directing the funds to FEP for the benefit of Erickson’s daughter, Kaara Borker, but did not deliver the money to Borker.
In 2024, Borker and her brother, Michael Erickson, assigned their rights to the proceeds to Asset Recovery, Inc. (ARI). ARI sought relief after learning that FEP had already received the funds. Following an evidentiary hearing, the superior court found no forgery but concluded that FEP breached its agreement with Borker, made little or no effort to deliver the proceeds, and claimed unsupported charges beyond its $4,000 contractual fee-and-cost cap.
The Court’s Holding
The Court of Appeals affirmed. It held that FEP’s agreement with Borker was not an assignment of her ownership interest in the proceeds; it only partially assigned FEP authority to pursue her claim. Michael had no agreement with FEP. The heirs therefore retained their rights and could assign them to ARI.
The court also held that ARI adequately proved the assignments through the assignment document and the heirs’ testimony. The best-evidence rule did not require ARI to produce a separate confidential contract because ARI was proving that assignments occurred, not the contents of that contract. The superior court had statutory authority under A.R.S. § 33-812(P) to review FEP’s fee and inherent authority to enforce its prior order. It properly limited FEP to $4,000 and ordered $56,849.11 paid to ARI, while awarding ARI $9,500 in trial-level attorney fees and taxable costs.
Key Takeaways
- An agreement authorizing a company to recover foreclosure proceeds does not necessarily transfer the claimant’s ownership rights.
- A claimant may challenge the reasonableness of a third party’s fee for recovering excess foreclosure proceeds under A.R.S. § 33-812(P).
- Courts retain authority to enforce their judgments and ensure that excess proceeds are properly distributed.
Why It Matters
The decision confirms that recovery companies cannot treat a limited authorization to pursue excess proceeds as an outright assignment of a claimant’s interest. It also illustrates the superior court’s power to scrutinize recovery fees and require return of funds when the third party has not properly performed its agreement.
ARI was also awarded reasonable attorney fees and costs on appeal under A.R.S. § 12-341.01, subject to compliance with ARCAP 21.